The rising influence of Millennials and Gen Z is reshaping the apparel landscape, emphasizing the need for brands to connect with these younger audiences through digital platforms and resonate with their values. The apparel industry is a dynamic sector shaped by various factors, including rising consumer spending, growing disposable incomes in emerging markets, advancements in technology, and increasing demand for sustainable products.
Thus, stocks like Abercrombie & Fitch Co. (ANF), American Eagle Outfitters, Inc. (AEO), and Revolve Group, Inc. (RVLV) could be ideal buys. These companies are capitalizing on the industry trends, with promising innovations focused on millennials.
The shift towards online shopping and hybrid working models has also significantly influenced the industry, driving the adoption of home delivery options and e-commerce platforms. Exports further bolster the sector, making it a critical component of global trade. In 2023, the global apparel market was valued at $1.71 trillion and is expected to grow at a CAGR of 4.1% from 2024 to 2030, reflecting the robust expansion and opportunities within this industry.
Considering these positive developments, let's delve deeper into apparel stocks:
Abercrombie & Fitch Co. (ANF)
ANF is a global retailer offering apparel, accessories, and personal care products for men, women, and children under brands like Abercrombie & Fitch, Hollister, and Gilly Hicks. It serves customers through stores, e-commerce, and licensing channels worldwide.
On December 4, ANF announced a multi-year franchise partnership with Myntra Jabong to expand its presence in India. The collaboration focuses on establishing retail stores, e-commerce platforms, and digital storefronts to tap into India’s dynamic fashion market and drive long-term growth.
During the fiscal third quarter that ended November 02, 2024, ANF’s net sales increased 14.4% year-over-year to $1.21 billion. Its adjusted operating income grew 25.4% from the year-ago value to $ 179.28 million. In addition, the company’s net income and adjusted EPS came in at $133.86 million and $2.50, up 37% and 31.6% over the prior-year quarter, respectively.
Analysts expect ANF’s EPS and revenue for the fourth quarter ending January 31, 2025, to increase 18% and 7.1% year-over-year to $3.50 and $1.56 billion, respectively. It surpassed the Street EPS and revenue estimates in each of the trailing four quarters, which is promising.
Over the past year, the stock has gained 96.2% to close the last trading session at $151.35. It soared 71.6% year-to-date.
ANF’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
ANF has an A grade in Quality. It is ranked #15 out of 60 stocks in the B-rated Fashion & Luxury industry.
Beyond what we have stated above, we also have given ANF grades for Growth, Value, Momentum, Stability, and Sentiment. Get all the ANF’s ratings here.
American Eagle Outfitters, Inc. (AEO)
AEO is a global multi-brand retailer offering jeans, apparel, accessories, and personal care products under its American Eagle, Aerie, OFFLINE by Aerie, Todd Snyder, and Unsubscribed brands. It serves customers through retail stores, concession-based shops, and digital platforms.
On September 24, AEO announced a quarterly cash dividend of $0.125 per share. The dividend will be paid on October 30, 2024. It pays an annual dividend of $0.50, which translates to a dividend yield of 2.78% at the prevailing price levels.
AEO’s total net revenues were $1.29 billion in the fiscal third quarter that ended on November 2, 2024. Its non-GAAP operating income came in at $123.65 million. In addition, the company’s non-GAAP net income came in at $93 million, and non-GAAP EPS came in at $0.48.
Street expects AEO’s revenue and EPS for the year ending January 31, 2025, to increase 1.4% and 11.3% year-over-year to $ 5.34 billion and $1.69, respectively. It surpassed the consensus EPS estimates in all of the trailing four quarters.
The stock plunged down to 5.6% in the past month to close the last trading session at $17.99.
AEO’s POWR Ratings reflect strong prospects. It has a B grade for Growth. It is ranked #31 out of 60 stocks in the same industry.
To access AEO’s Value, Momentum, Stability, Sentiment, and Quality ratings, click here.
Revolve Group, Inc. (RVLV)
RVLV is an online fashion retailer catering to millennials and Gen Z globally through its REVOLVE and FWRD segments. It offers apparel, footwear, accessories, beauty, home products, and luxury items from emerging and established brands via its websites and mobile apps.
RVLV’s net sales increased 9.9% year-over-year to $283.15 million in the fiscal third quarter that ended on September 30, 2024. Its income from operations was $14.25 million, up significantly from the year-ago value. Its net income stood at $10.75 million, representing an increase of 238.3% over the prior-year quarter. Its EPS grew 275% from the year-ago value to $0.15.
Street expects RVLV’s revenue for the fiscal fourth quarter (ending December 31, 2024) to increase 9.5% year-over-year to $ 282.27 million. Its EPS for the same quarter is expected to grow 15.9% from the prior year to $ 0.10. In addition, it surpassed the consensus EPS estimates in all of the trailing four quarters.
Shares of RVLV have gained 166.8% over the past year and 124.2% year-to-date to close the last trading session at $37.17.
RVLV’s bright prospects are apparent in its POWR Ratings. It has an A grade for Growth and a B for Quality. Within the Consumer Goods industry, it is ranked #26 out of 56.
Click here to see RVLV’s ratings for Value, Momentum, Stability, and Sentiment.
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ANF shares rose $1.65 (+1.09%) in premarket trading Monday. Year-to-date, ANF has gained 73.43%, versus a 29.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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